Coca-Cola CEO James Quincey delivered a grim forecast for the global economy’s recovery from the impact of the coronavirus pandemic on Wednesday.
“The economic impact of the lockdown is just starting to begin,” Quincey said on CNBC’s “Squawk Box.”
In the United States, more than 36 million Americans have applied for unemployment benefits since the coronavirus upended the economy. The Congressional Budget Office said Tuesday that it expects U.S. GDP to plunge 38% on an annualized basis in the second quarter. The International Monetary Fund is forecasting that the global economy will shrink by 3% this year.
Quincey said that he expects a “U”- or “extended U”-shaped recovery rather than one shaped like a “V,” where the economy quickly snaps back to pre-crisis activity.
While he said it was too early for Coke to gauge how consumer spending habits are changing as lockdowns lift, the company expects that consumers will be more strapped for cash.
“We’re gonna have to recognize that coming after this virus crisis will be the economic impact and hangover of the lockdown, and there will be a much greater focus from the consumer on affordability or getting the prices lower,” he told CNBC’s Andrew Ross Sorkin.
Coke is still seeing negative global volumes in May, although they have improved slightly after plunging 25% in April, according to Quincey. Roughly half of the company’s revenue comes from away-from-home channels, like restaurants, movie theaters and stadiums. In China, which began easing stay-at-home orders in April, demand in May has not yet recovered to pre-crisis levels.
Shares of Coke were up 1% in premarket trading. The stock, which has a market value of $191 billion, has fallen 19% so far in 2020.